1. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Chapter 7 Local Buyer Behavior, Segmentation, and Positioning

3. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Local Culture and Buyer Behavior Marketing and Materialism Marketing actions are basically undertaken in the belief that more and better goods will bring an increase in consumers’ standards of living, an increase in their satisfaction, and perhaps even more happiness When anticipating customers’ reactions to new products and increased product choices, it is important to note the limits on the causal relationship between material affluence and personal happiness The psychologically effective impact of risking income is that of the relative income, not the absolute income

4. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Local Culture and Buyer Behavior The Meaning of a Product A necessary preliminary step in analyzing local consumers is to question what the product or service “means” to them This is a question of what the product represents generically (the core benefit) The identification of a different core benefit is a necessary first step in analyzing local customers The generic function of a product depends more on the local environment than on innate individual preferences A Universal Trait in Local Form Consumers perceive a link between behavior and desired results Buyers do not choose products or services without reason, even in the most fatalistic of cultures

5. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Buyer Decision Making Problem Recognition A problem is when an individual perceives a difference between an ideal and an actual state of affairs New products often lead to tension and a recognized “problem” The core benefits of the product may differ between local markets For the local marketer it is important to recognize that education about the core benefits might be necessary in order to create a demand for the product

6. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Local Culture and Buyer Behavior Search A consumer’s search for alternative ways to solve the problem is closely related to his or her level of involvement with the product category For product with which involvement is high, search tends to be more comprehensive and time consuming For convenience and habit purchases, the decision process is shorter, with little need for extensive searches or alternative evaluations Search intensity is dependent on the perceived availability of the alternative One advantage for product with high global brand awareness is that initial distrust is easier to overcome

7. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Local Culture and Buyer Behavior Evaluation of Alternatives A new product or service is in the “consideration set” A highly involved individual will process the available information matching the pros and cons of the alternatives against preferences Consumers can deal with multiattributed evaluations in several ways They can use gradually less-important features to successively screen out alternatives A “hierarchical” decision rule They can consider all features simultaneously A “compensatory” rule

8. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Local Culture and Buyer Behavior Choice The final choice of which alternative to select or try is typically influenced by social norms and by situational factors Social Norms Where group pressures to comply are strong social norms influence is expected to override multiattributed evaluation The social norms can be usefully analyzed by the extended Fishbein model The social norms involve two aspects Social forces Motivation to comply

9. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Local Buyer Research Research Objectives It is common to distinguish between the marketing decision problem and the marketing research problem The decision problem might revolve around the questions of what to do about declining sales The research problem might be to assess customer attitudes and satisfaction levels Qualitative Research Focus groups have become standard for initial exploratory research In foreign markets, focus groups have the advantage of being relatively inexpensive, can be completed quickly, and can reach local pockets of the market Unfortunately, they can also constitute an unrepresentative sample because typical screening criteria are incorrect in the new environment or are not implemented correctly

10. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Local Buyer Research Consumer Surveys Surveys of relatively large (n = 500 and above) random samples drawn from a sampling frame of representative product users constitute the central importance of traditional marketing research There are many cultural aspects affecting the application of the kind of direct questioning involved in the typical consumer survey In high context cultures the idea that one can understand consumers from their responses to a formal survey is naïve Face-to-face interviews are prone to bias because of demand characteristics Even if surveys are afflicted by a number of problems and potential distortions in many foreign markets, they can still be useful

11. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Local Buyer Research Trade Surveys The quickest, least expensive, and most commonly used method for learning about customers in a market Interviewing people in the distribution channels and trade associations can provide a good starting point for further data gathering and analysis In the U.S., the use of middlemen for information about consumers is usually limited to the sales and scanner records of retailers and wholesalers In countries with less social mobility and less diversity than the U.S., key informants in the trade are good sources of information about buyers Observational Studies Research involving direct observation of customers buying and using existing product can be very beneficial

12. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Local Buyer Research Causal Research Involves more scientific methods of research design and data analysis Typical research designs involve experimental methods and the estimation of links in causal models Measurement and Scaling In attitude scaling, very basic factors can create difficulties The cognitive and emotional concepts measured might not be equivalent across cultures Questionnaire Construction The questionnaire employed in the typical consumer survey needs to be carefully pretested

13. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Local Buyer Research Sampling The lack of comprehensive and reliable sampling frames has long been a problem for marketing researchers in many countries However, the emergence of firms that specialize in developing lists for direct marketing and survey research is gradually resolving this problem Fieldwork Fieldwork will typically be handled by a subcontracting marketing research firm, sometimes a full-service advertising agency It is important to emphasize that as economic growth occurs, mature markets with differentiated demand requiring formal and scientific market research applications will emerge in many countries

14. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Local Microsegmentation To be useful for marketing purposes Targeted segments have to be Identifiable (What distinguishes them?) Measurable (How many belong to each segment?) Reachable (How do distribute to, communicate to, each segment) Able to buy (Can they afford it?) Willing to buy (Do they want it?)

15. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Local Microsegmentation Segmentation Criteria The most useful segmentation criteria accomplish three goals The criteria help give a clue to what influences the segment’s buying behavior Both consumption level and choice between competing brands The criteria should be reflected in published data so that the size of the segment can be calculated The criteria should help identify the media through which marketers can communicate with the segment

16. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Local Microsegmentation Segmentation Criteria Economic - the most basic local segmentation criterion is still economic development Demographic - the age and family structure in different countries play an important role in determining global segments Culture - people care about their identify even though a lot has been said in the media about the emergence of global segments of people Benefits - the most clearcut segmentation criteria are those which focus on the benefits sought Lifestyle – consumers start developing their own lifestyle with buying behavior involving more than simple necessities

17. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Local Product Positioning The Product Space Four sets of data constructs the product space Salient Attributes The data on what attributes a customer looks for in a product Evoked Set Involves identifying what brands are considered by the buyer Attribute Ratings Shows how the individual rates the brands in evoked set on salient attributes Preferences Involves how the brands rank in terms of overall preferences

18. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Local Product Positioning Strategic Implications The traditional idea of product positioning New entries simply were added somewhere in the consumer’s existing perceptual maps Overcoming Mispositioning A drawback of a global product or brand is that it is not adapted to the actual preferences in a particular foreign market Why would customers buy a mispositioned offering if they have alternatives closer to their ideal? Lower price Brand image and status

19. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Local Product Positioning Changing the Product Space In practice it is unlikely that customers’ perceptual maps stay unchanged when a new product or brand enters the market Changing Preferences The entry of a global brand might well change preferences in addition to perceptions In consumer psychology terms, the global brand effect on positioning usually involves social norms which change preferences in favor of the global brand

20. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Targeting Strategies Market Segmentation Cases Universal Segment A segment which is the same across countries Unique Segment A segment that differs across countries Product Positioning Dimensions Uniform Positioning Indicates a positioning which is the same across countries Adapted Positioning Indicates that the positioning theme differs across countries